Heartland by-Products, Inc. v. U.S.

Decision Date19 October 1999
Docket NumberSlip Op. 99-110.,Court No. 99-09-00590.
Citation74 F.Supp.2d 1324
PartiesHEARTLAND BY-PRODUCTS, INC., Plaintiff, v. UNITED STATES of America, Defendant, and United States Beet Sugar Association, Defendant-Intervenor.
CourtU.S. Court of International Trade

Nicely, Washington, DC), and Serko & Simon (David Serko, New York City, Daniel J. Gluck, Chicago, IL), for Plaintiff.

David W. Ogden, Acting Assistant Attorney General; Joseph I. Liebman, Attorney-in-Charge, International Trade Field Office; Commercial Litigation Branch, Civil Division, Department of Justice (Aimee Lee); Karen P. Binder, Office of Assistant Chief Counsel, International Trade Litigation, Customs Service, (Yelena Slepak) and Allan Martin, Associate Chief Counsel, Customs Service, (Ellen Daly), of counsel, Washington, DC, for Defendant.

Wilmer, Cutler & Pickering (Lewis J. Liman, Robert C. Cassidy, Jr.), Washington, DC, for Defendant-Intervenor.

OPINION

BARZILAY, Judge.

I. INTRODUCTION

This matter is before the court pursuant to Plaintiff's Motion for a Preliminary Injunction or in the alternative, for Judgment Upon an Agency Record pursuant to USCIT R. 56.1.1 Plaintiff seeks pre-importation review of a ruling issued by the United States Customs Service ("Customs") revoking a prior classification ruling issued to Plaintiff. See Revocation of Ruling Letter and Treatment Relating to Tariff Classification of Certain Sugar Syrups, 33 Cust. Bull. No. 35/36 at 41 (Sept. 8, 1999) ("Final Notice"). The court exercises jurisdiction pursuant to 28 U.S.C. § 1581(h) (1994).2

II. BACKGROUND

Plaintiff, a sugar refiner, imports sugar syrup from Canada and refines the syrup into liquid sucrose. The sugar syrup is derived from sugar cane and sugar beets and contains more than six percent soluble non-sugar solids. Before undertaking business operations, Plaintiff sought an advance ruling from Customs pursuant to the provisions of 19 C.F.R. § 177 (1995).3 On May 15, 1995, Customs issued New York Ruling Letter ("NYRL") 810328 classifying the merchandise under subheading 1702.90.40 of the Harmonized Tariff Schedule of the United States ("HTSUS") (1995)4, with a .7 cents per liter general rate of duty and a .2 cents per liter special rate of duty if the goods qualify as North American Free Trade Agreement ("NAFTA") originating goods. Administrative Record File I, Doc. 3 ("AR I(3)").

Plaintiff began its refining operations in the middle of 1997. The process Plaintiff uses to refine the sugar syrup into liquid sucrose, while proprietary, may be described in general terms. Before arriving in the United States, the sugar syrup is manufactured according to Heartland's specifications. The process involves adding raw granular sugar, dry form sucrose, to molasses. Water is added and the material is then heated and agitated dissolving the dry form sucrose and forming a definable, homogeneous sugar syrup. See AR I(26) at 3. After being transported to the plant in Taylor, Michigan, the syrup is pumped into storage tanks and the following steps occur. First, the syrup is placed in a vacuum pan to induce the crystallization of sucrose. Next, the massecuite, a slurry of crystals and syrup, is subjected to centrifugal force to separate the crystals from the syrup. Finally the crystals are subjected to a number of steps making them suitable to sell as liquid sucrose for use in the production of cereal, ice cream, candy and other food applications. The sucrose content of the liquid sucrose is several percentage points higher than the syrup in its condition as imported. Some of the residue, which is molasses, is sold for use in animal feed, some is lost in the process and some is returned to Canada.

On January 14, 1998, Defendant-Intervenor, United States Beet Sugar Association, filed a petition with Customs under 19 U.S.C. § 1516, suggesting alternatively that Customs had the option to proceed under 19 U.S.C. § 1625, seeking reclassification of the sugar syrup.5 AR I(1). Customs chose the latter option, and on June 9, 1999, issued notice of its intent to revoke NYRL 810328 and invited comments pursuant to 19 U.S.C. § 1625(c)(1) on proposed Headquarter Ruling ("HQ") 961273. See Proposed Revocation of Ruling Letter and Treatment Relating to Tariff Classification of Certain Sugar Syrups, 33 Cust. Bull. No. 22/23 at 52 ("Preliminary Notice"). Because of this procedural mechanism, Plaintiff was forced to obtain Defendant-Intervenor's submission through a Freedom of Information Act request. Following an extension of the comment period to August 9, 1999, on September 8, 1999, Customs published a notice of revocation, which pursuant to 19 U.S.C. § 1625 makes HQ 961273 effective on November 8, 1999, sixty days following publication. See Final Notice at 41. Plaintiff then sought relief in this court as previously described.6

III. STANDARD OF REVIEW

28 U.S.C. § 2640(e) (1994) provides that "[i]n any civil action not specified in this section, the [court] shall review the matter as provided in [5 U.S.C. § 706]." (28 U.S.C. § 1581(h) is not specified therein). Id. 5 U.S.C. § 706(2)(A) provides, in relevant part, that "the reviewing court shall ... hold unlawful and set aside agency action, findings, and conclusions of law found to be ... arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." Id. The scope of review is limited to the administrative record. See 28 U.S.C. § 2640(e); 5 U.S.C. § 706.

IV. DISCUSSION

A. Plaintiff Has Met Its Burden of Demonstrating by Clear and Convincing Evidence That the Court Has Jurisdiction Pursuant to 28 U.S.C. § 1581(h).

Plaintiff asserts that the Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1581(h) with respect to declaratory relief and § 1581(i) with respect to injunctive relief. Defendant concedes jurisdiction with respect to § 1581(h) but challenges jurisdiction under § 1581(i). Defendant-Intervenor contests jurisdiction under both § 1581(h) and (i), and argues that the Court may only exercise jurisdiction pursuant to § 1581(a). Because of the differing positions of each party in this case, the Court finds it necessary to address the issue of jurisdiction in detail. The Court exercises jurisdiction under § 1581(h), and will grant relief accordingly, thus the need for a preliminary injunction is moot.

Section 1581(h), Title 28, United States Code, provides:

The [court] shall have exclusive jurisdiction of any civil action commenced to review, prior to the importation of the goods involved, a ruling issued by the Secretary of the Treasury, or a refusal to issue or change such a ruling, relating to classification, valuation, rate of duty, marking, restricted merchandise, entry requirements, drawbacks, ... or similar matters, but only if the party commencing the civil action demonstrates to the court that he would be irreparably harmed unless given an opportunity to obtain judicial review prior to such importation.

28 U.S.C. § 1581(h) (1994). The Court of Appeals for the Federal Circuit outlined four requirements for invoking the jurisdiction of this Court under 28 U.S.C. § 1581(h):

(1) judicial review must be sought prior to importation of goods;

(2) review must be sought of a ruling, a refusal to issue a ruling or a refusal to change such ruling;

(3) the ruling must relate to certain subject matter; and

(4) irreparable harm must be shown unless judicial review is obtained prior to importation.

American Air Parcel Forwarding Co. v. United States, 718 F.2d 1546, 1551-52 (Fed.Cir.1983), cert. denied, 466 U.S. 937, 104 S.Ct. 1909, 80 L.Ed.2d 458 (1984).

Defendant does not claim that the Court lacks jurisdiction under § 1581(h). Between the other parties to this action, there is no dispute as to the first three requirements of jurisdiction under this section. Defendant-Intervenor challenges only Heartland's claim of irreparable injury. "When a jurisdictional issue is raised, the burden rests on the plaintiff to prove that jurisdiction exists." Manufacture De Machines Du Haut-Rhin v. Von Raab, 6 CIT 60, 62, 569 F.Supp. 877, 880 (1983) (citing United States v. Biehl & Co., 3 CIT 158, 160, 539 F.Supp. 1218, 1220 (1982)). Plaintiff must demonstrate irreparable harm by a clear and convincing evidence standard.7

Irreparable harm is that which "cannot receive reasonable redress in a court of law." Manufacture De Machines Du Haut-Rhin, 6 CIT at 64, 569 F.Supp. at 881-82 (quoting BLACK'S LAW DICTIONARY 706-707 (5th ed.1979)). "In making this determination, what is critical is not the magnitude of the injury, but rather its immediacy and the inadequacy of future corrective relief." National Juice Products v. United States, 10 CIT 48, 53, 628 F.Supp. 978, 984 (1986) (citations omitted). To fulfill its burden, Plaintiff must "set forth sufficient documentation to support its allegations in establishing the threat of irreparable harm." Thyssen Steel Co., Southwestern Division of Thyssen, Inc. v. United States, 13 CIT 323, 326, 712 F.Supp. 202, 204 (1989) (citing 718 Fifth Avenue Corp. v. United States, 7 CIT 195, 198 (1984)).

Plaintiff asserts that implementation of the revocation of NYRL 810328 will destroy its business. Compl. ¶ 9 (citing Affidavit of Gregory Kozak ("Kozak Aff.")). Plaintiff claims that the reclassification of Heartland's sugar syrup as per HQ 961273 will subject the sugar syrup to a prohibitive tariff-rate quota ("TRQ"), thereby preventing Heartland from importing the product and effectively forcing it to close its doors. Id.

Plaintiff has provided sufficient documentation to clearly and convincingly establish jurisdiction under § 1581(h). Attached to its brief is the affidavit of the President of Heartland, Gregory Kozak, detailing the extent of business disruption that Heartland will suffer if it is unsuccessful in its legal challenge. The proposed increase in duties of 7000 percent, which will...

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